By Sabrina Lynch
- There has been a 38% increase in new Black business owners
- 17% of Black women are in the process of starting or running new businesses and over 1.2 million African Americans made the decision to be self-employed
The impact of COVID–19 caused immense financial distress for small businesses across the country, particularly African American entrepreneurs, who were one of the hardest hit groups at the beginning of the pandemic. However, the tides have turned as the number of Black business owners continues to rise, skyrocketing to being 28% higher in Q3 2021 than pre-pandemic levels, compared to 19% Latino and 5% Asian business owners. This is thanks to a record number of Black female entrepreneurs starting their own enterprises and becoming CEOs of their companies.
Why This Matters: In wake of the racial reckoning over George Floyd’s murder, sisters really are doing it for themselves to reignite the economy and spur new investments within the Black community. During the early months of the pandemic, Black-owned small businesses closed at twice the rate of other commerce shops, 58% of them were at risk of financial distress, with 41% shutting down. When the Biden administration sanctioned Fiscal Recovery Funds, African Americans received fewer business grants than their white-counterparts, and were five times more likely not to be a recipient of the Paycheck Protection Program (PPP).
The effects of COVID caused a racial equity regression, with millions of African Americans having to leave their jobs due to lack of access to childcare, salary slashes, workplace discrimination and corporate practices that discouraged remote working. Being shut out of resources to get back on their financial feet left People of Color at even more of an economic disadvantage and dealing with the harsh reality of having less opportunities to accrue generational wealth. Fast forward to 2022 where a surge of consumers are rallying to support Black businesses and just over 1.2 million African Americans making the decision to be self-employed.
Situational Awareness: Black entrepreneurs are raising significantly more venture capital than before, having to previously deal with $72,000 less capital than white startups. However, 800,000 more Black-owned employer firms are needed to reach true equity. As America experiences a 38% increase in new Black business owners, this no longer looks to be an unattainable dream as African Americans drill down more structured models they can sustain for a longer period of time.
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